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		Home Page $2.4 Tril Bush Budget Ups Defense, Security, Curbs Other Spending Tuesday February 3, 10:28 am ET By Sean Higgins The White House's proposed $2.4 trillion federal budget got a chilly reaction on Capitol Hill Monday. Lawmakers in both parties criticized it for its ballooning deficit. Few were happy with President Bush's domestic spending agenda either. The lawmakers' reactions suggest getting the budget through Congress - tough under the best circumstances - will be a long, hard fight this year. It will be a test for Bush, who has yet to follow through on a veto threat. Bush's budget would increase overall spending by 3.5% in fiscal 2005. It would provide big hikes in defense and anti-terrorism programs, but hold nondefense domestic spending to a 0.5% increase, below inflation. The budget deficit would rise to a record $521 billion this year, but the White House expects it to fall to $364 billion the following year and $237 billion by 2009. As a share of GDP, the deficit would peak at 4.5% this year, below the 1983 record of 5.6%. It would fall to 3.1% in 2005 and 1.6% in 2009. The budget calls for cutting or killing outright more than 120 federal programs. Cool Capitol Hill Response Democrats were unimpressed. "The administration has dismissed these deficits as 'manageable,' but chronic deficits threaten our economic strength by crowding out private investment, driving up interest rates and slowing economic growth," said Rep. John Spratt, D-S.C., ranking Democrat on the House Budget Committee. Many Republicans also weren't pleased. In a meeting Friday, they unloaded on White House budget chief Josh Bolten. They were especially upset that Medicare drug benefit cost estimates were raised by $134 billion over 10 years to $534 billion. "Grave concern was expressed about the overall level of spending," said Rep. John Shadegg, R-Ariz. The Bush administration responded it did the best it could to reconcile its tax-cutting agenda, the costs of the war on terror, and domestic spending priorities. "Our nation remains at war," Bush declared in his budget message. "This nation has committed itself to the long war against terror. And we will see it through to its inevitable conclusion." Some conservative groups said it was a good first step for an administration not noted for fiscal restraint. "I'm pleasantly surprised," said Heritage Foundation economist Brian Reidl. "It nearly freezes nonentitlement, nondefense spending." The key question is whether the White House sticks by its budget. Bush must treat this budget as a ceiling, not a floor, Reidl said. In fiscal 2004, Bush proposed about $782 billion in discretionary domestic spending. But Congress passed - and he signed into law - $900 billion. Flattish nondefense domestic spending is offset by big funding increases to defense and homeland security. The defense budget would rise 7% to $402 billion for the coming fiscal year. That's the first year of a five-year plan to raise defense spending to $488 billion by 2009. "I expect that Congress will agree to the increase for next year," said Steven Kosiak of the Center for Strategic and Budgetary Assessments. He questioned if the rise was sustainable, though. The Bush budget doesn't include additional supplemental funding for Iraq. Lawmakers suspect the White House may ask for more funding later in the year. Homeland security spending would rise 10% to $35 billion. The FBI alone would get an 11% hike. The budget also calls for the White House's 2001 tax cuts to be made permanent, projected to reduce revenues by $900 billion over 10 years. It would also provide $23 billion to offset the alternative minimum tax for one year, giving lawmakers time to reform the ATM, which increasingly snags middle-class taxpayers. Bush also wants to let taxpayers put up to $5,000 each year into their individual retirement savings accounts and into a lifetime savings account, which could be tapped for any reason. Bush had proposed that individuals be allowed to put as much as $7,500 into each account. The poor would be encouraged to save with a dollar-for-dollar match up to $500. The White House called for smaller increases in favored programs. NASA would get an additional $1 billion from last year's levels. Most of the funding for Bush's Moon-Mars program would come from retiring the shuttle program. The No Child Left Behind program would get $12.4 billion, $1 billion more than last year. Overall education spending would rise by $1.6 billion to $57.3 billion. Bush would extend unemployment benefits for five months, at a cost of $7 billion. Food safety programs at the Agriculture Department would get an extra $300 million to deal with mad cow disease. It would also increase the National Endowment for the Arts' funding by $18 million. That upset many in the GOP, which has tried for years to kill the agency. The budget calls for spending cuts in seven Cabinet departments, but lawmakers were still pouring over the budget to see where exactly the ax would fall. Among the 2005 proposals: Overall environmental spending reportedly would fall by $2.4 billion; the Department of Housing and Urban Development's budget would be cut by $1.8 billion to $13.2 billion; and the Energy Department would get $3.5 billion, down by $100 million. Heritage's Reidl said the upcoming vote on the highway spending bill, one of lawmakers' pet projects, will set the tone for the budget debate. "That will be the first test to see if there really is any spending restraint," he said. The House Transportation and Infrastructure Committee is debating a six-year, $375 billion transportation bill that would include a nickel-a-gallon tax hike. The White House has proposed $247 billion with no tax hike.   Back to Original Article: Mortgage News You Can Use   Continue with: Lies, Damned Lies, and Bush's Budget US Govt Proposes Speedier GDP, Trade Stats In '04 Budget Ford Motor's January U.S. Auto Sales Drop 5.2 Percent; Nissan Posts Gain Budget Plan Includes More For SEC, Mortgage Overseer Mortgage rates seen holding steady Don't overlook the tax breaks of home mortgage points Reserve Bank to make decision on interest rates tomorrow Bogus Budgeting Spending Outpaces Income Budget Plan Includes More For SEC, Mortgage Overseer Job Cuts Increase in January Treasuries Bounce, Wary of Moskow Factor Yields increase on Treasury bills Oil Falls as Speculators Take Profits Companies make lots of pink-slip plans in January Bush calls for revised savings plans Wages, factory hiring fall 2 engines of growth power economy Job cut announcements jump
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